The Australian dollar has had a volatile session during the trading session on Friday, initially breaking above the 200 day EMA and the 61.8% Fibonacci retracement level before turning around. With so much up in the air when it comes to the trade war, it’s not a huge surprise at the Australian dollar would struggle. Ultimately, this market should continue to be very volatile, and unfortunately for the Australians very sensitive to the Chinese situation. At this point, it’s obvious that the Americans and the Chinese are going to struggle to come to some type of final deal, and it’s possible that Wall Street has the entire thing wrong. For what it’s worth, a lot of Wall Street traders assume that there is going to be some type of small deal soon, but one thing that has been obvious is that every time the markets think they get a deal, something goes wrong.
AUD/USD Video 16.12.19
That being said, from the technical analysis standpoint, the market has made a bit of a double bottom and then a couple of a “higher lows.” This obviously is very bullish but the 200 day EMA has offered enough resistance that it looks like we aren’t quite ready to continue going higher. If we get a “higher low” from here, then it’s likely that we will push to the upside and go looking towards the 0.70 level. Ultimately, the market then should go to the 0.71 level, which is basically where the 100% Fibonacci retracement level. If we can break above the 100 Fibonacci retracement level, then it’s likely that we go much higher and that the trend has completely changed in favor of the Aussie. If we were to somehow break down below the 0.67 handle, that would be catastrophic.
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This article was originally posted on FX Empire
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